A discount isn’t a Prize – Period!

by Kelly S. Digital Marketer

Using prizes as a marketing tool has been around since ….. Marketing itself. It’s a simple process. Run a contest, offer prizes to get consumers interested in your product and service, it’s hard to complicate.

In fact, the benefit of offering a product prize in competitions as opposed to cash is generally at the cost. If you are a retailer of, say, Homewares, it stands to reason that you can pick up the prize at your own cost price (better if you manufacture the goods yourself), and therefore give away a $1,000 gift hamper for considerably less. Cash costs you cash, and the Federal Reserve isn’t jumping over itself to get companies to promote their product.

The only downside of offering a prize at retail value, is that sometimes the actual value is debatable. This is mostly the case in high value products such as hotel accommodation, in which the value is given as ‘rack rate’ (translated: the top shelf price paid by the 0.0001% of the population who stumble in at 3 in the morning following an airline delay). That's $500 a night room, as advertised, can be picked up for $130 on any reputable website.

Still, prize winners are generally quite happy people. Regardless of the advertised value, they’ve picked up something for nothing, so who wants to complain?

Voucher and gift card competitions can cause some grief. Winning $500 to spend at your local supermarket is a no-brainer. You can visit once, twice, or ten times, and generally walk out with a basket of stuff. Happy days.

What if, though, the prize is a $100 gift voucher at a store in which the cheapest item is $400. Problem. The ‘winner’ still has to shell out.

The perception of a voucher as a prize, is the recipient can walk away with something. Outright. Sometimes there may be postage costs involved, which is still contentious. After all, many online retailers use postage and handling costs as a means of boosting profit. It explains the low retail prices.

The issue is that discounts are relatively easy to get from anywhere. Retailers will gladly offer 10, 15 and 25% off on first purchases, just to get someone through the door. The idea/hope is that eventually that person will transfer into a customer.

Discounts are discounts – they’re not prizes. People don’t win discounts – they get discounts.